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Good news for holiday-home landlords in the Balearics

The Balearic authorities have confirmed that short-term rentals without a tourist licence are still possible under present regulations, and there are no plans to change this.

Article by Will Besga, Lawyer

After the Government in Madrid recently devolved the regulation of the rental market to regional authorities there has been a lot of interest in the legal situation regarding holiday rentals, which the Balearic Government tries to control with a system of licences. I have been arguing for some time that tourist lettings are legal with or without a licence, if you go about them in the right way. Last Friday, there was, at long last, an important announcement by the Tourism authorities: the system of laws that regulate rental agreements need not be changed, as they already allow for the possibility of renting out flats and homes for any period of time. This is a welcomed affirmation on what I have been saying all along.

Even if you have been following my articles on this subject (Holiday-lettings in the Balearics; tax implications for owners, Short-term rentals and holiday-lettings in the Balearics under the new Tenancy Act, Tourist rental licences in the Balearics explained) let me recap. The problem with short term lets began in 2012, when the Balearics Touristic Act came into existence. This law regulated touristic short-term lets, and it did so by demanding that a (touristic) license had to be obtained. The problem, of course, was that the Tourism Act contemplates that only semis and detached houses can obtain them. This left, many assumed, all the rest of housing types in a situation of illegality, as, if you can only do short term touristic lets with a license, and you can only get one if you own a house or a semi, then it, it seemed, you cannot rent flats for short periods of time. Not so, as the Spanish Tenancy Act allowed (and allows) the renting of ANY type of property for ANY period of time. Indeed, as I had been saying (and practicing), the Balearics Tourism Act regulated touristic lets, leaving anything non-touristic outside of its scope, and therefore leaving the possibility perfectly open to rent out flats, or terraced houses, or anything else you may think of, for hours, days, weeks or any other unit of time. Yet unfortunately the confusion remained amongst many property owners, in spite of my efforts and those of others in spreading the message.

A few months ago, there was another event that confused matters even further: a change in the Spanish Tenancy Act which reinforced the idea that, this time, short term lets without a license (ie, all your flats) was made illegal, because they were no longer contemplated in the Tenancy Act. This, again, was not the case, as the Tenancy Act continued, just like before, to allow the possibility of renting out anything for any period of time, as long as it is not a touristic rental, that is, that, amongst other things, services are not provided.

So we come to last week. At the beginning of it, newspapers were filled with misleading information, claiming that 62,000 flats were made illegal by the pincer movement between the Tourism Act and the Tenancy Act, and that a change of the law was needed with immediate effect in order to legalise these properties and allow them to be rented out for short periods of time. Then on Friday, a meeting took place between Mr. Delgado, the Balearics Tourism chief, some mayors and other interlocutors. And guess what happened and what was said? Delgado said that a change in the law was not needed, that new legislation was not going to be passed, because the Tourism Law regulated touristic lets, and the Spanish Tenancy Act has been allowing all along the letting of properties for any amount of time as long as it is not a touristic let, that is, as long as services are not provided.

So I rest my case. What I have been saying and doing with my clients, has been corroborated at last this Friday: there never was a problem with the law (beyond its lack of clarity), and renting flats was never illegal, it is just that if you are going to do a short term let with services, or you will commercialise it through touristic channels, or both, then you really are doing a touristic let and in that case, your activity falls within the Tourism Act and THEN you need a license. In schematic form, the situation has been all along, and is, the following:

1. There are two types of short-term lets.

2. They are: ‘touristic’ and ‘non-touristic or ordinary’.

3. Touristic lets are those that have services, or are commercialised through touristic channels.

4. Ordinary lets cannot provide services, and cannot be advertised or operated through touristic channels (more on this another time).

5. Only houses and semis can house a touristic let, because only they can obtain (touristic) licenses.

7. But flats, townhouses, terraces etc. have always been able to be rented out non-touristically, that is, not through touristic channels and not with the provision of services.

8. So, if you have a house or a semi, you can chose between an ordinary rental and a touristic rental (see ‘Short Term Lets IV’ for an explanation as to the tax differences between both).

9. If you do not have a house or a semi, but you want to rent them out for short periods of time to your friendly tourist, then you simply do a short term ordinary let with a supporting contract and correct guidelines in place (see 10).

10. In order to do an ordinary let for short periods in your flat and terraced houses, you must take care in distancing yourself from a touristic rental:

(a) You must be careful where you advertise and what the advert says.

(b) You must have a contract that falls within the guidelines of the Tenancy Act and that does not include items that can be seen by the authorities as typical of a touristic contract. At the same time, it must have all the elements that one would encounter in a long term contract.

(c) You must not provide any services, not on paper, not in practice, and the house management companies, whose role is so important in short term lets, must operate with care.

You can take my word for this point system. But now you can also take the Tourism chief’s word. So I hope that you have not been waiting all this time in order to act and rent out your property. Do so, however, in the right manner and paying attention to the subtleties of each type of let.

Holiday / Tourist Rental Regulations in the Balearics

Links to the original Balearic legislation in both English and Spanish

10 thoughts on “Good news for holiday-home landlords in the Balearics”

This is really interesting, but I am still not convinced about how this can work in practice? Our property is not eligible for a tourist licence. We advertise on and Owners Direct type website, specifically targeting holidaymakers, and we use an agency to clean the pool, do the garden and clean the house. We do everything by the book, including having a Spanish tax agent, and full public liability insurance etc. Surely we could not advertise, or clean our pool if we simply offered a regular tenancy? Also it doesn’t give me much comfort to know that if we were “caught” we’d be defending ourselves on what sounds like a legal technicality? However we dress is up, we ARE renting out the property to tourists! Your points about agencies operating “with care” and distancing ourselves from the touristic rental sound more like defence arguments? If the inspectors came knocking on the door would they accept these points I wonder? We are really confused and worried about all this, and believe we have to withdraw our property, but would value more views.

CHIARA, where is your house situated? No problem with houses at all- we do “legalizations” for our customers at the fomento de turismo en Ibiza. A house does not get a “licese”- its just inscribed .With all respect to Will Besga, i would like to coment the situation here on the Balearics. I am from Ibiza and we have lots of discussions with all types of clients, agencies, owners and renters…If you read Article 52.2 of the law of turism says:. ” . . . under no circumstances shall homes found in multyfamily or attached buildings subjected to the horizontal property system be considered independent freestanding homes,and as a result tourist stays are forbidden in this kind of homes.”
Get the entire law on our page under :http://www.ibiza2010.eu/english/news-tips-and-taxes/
We are talking now of the LAU = Ley de Arendamiento Urbano= the normal short or long term rental in urban areas for residents,season workers, winter holidaymakers on self behalf etc etc NO SERVICE included- NO ADVERTISEMENT possible,
at least not in dangerous words describing it as “holliday apartment, hollidaymakers, touristic apartment etc etc.
But the reality is, that the owner gives it away to x-amount of agencies and give away control.And thats where the problem stars.I had controllers from Mallorca in my office- i did no rentals at all, only sales, but i was listed with my properties on a genaral webpage of different agencies with rentals and sales.And thats how they found me. Nothing happend. But some agents and owners had to pay fines.
My summary is: freestanding houses no problem- be inscribed- pay your tax (on Balearics at least) and make money
Apartments easy on short terms if you sign a contract according to the LAU without any service – all on self behalf
Avoid, as Will Besga describes very well, certain words in your advertisements.
Work together with 1 good Agency and check the adverts every 2 weeks.
Avoid problems with the neighbours and the comunity of owners.Give a profile of tennants you wish to reach like “Families prefered” etc – Less problems.
saludosssss

How do you attract holidaymakers if you cannot advertise through “touristic channels ” ?

What kind of contract do you have to issue ?

What sort of services are you not allowed to offer e.g. would cleaning in between lets be allowed but not cleaning during lets ?

The more I read the more confusing it gets . Who is going to buy all these previously rentable flats if you can´t make money on them ? Seems like yet another shot in the foot for the Spanish property market.

The first point that needs to be made is that it is NOT a problem to rent out a property to tourists without a license, if done properly. What is a problem is to rent it out AND PROVIDE SERVICES. This is not a technicality, it is the law, and it has been tested many times: many clients rent out their properties without licenses, according to my guidelines, which are the guidelines that the tourism inspectors have, and these rentals have passed the test. The law (both blackletter and jurisprudence) allows you to rent out ANY type of property, for ANY period of time, to ANY type of individual or company, whether it is a foeign worker, a tourist, a retiree etc. What you cannot do, thanks to the Balearics Tourism Act, is to engage in a touristic rental, which is a figure that was created by the Tourism Act. Mainly, it involves offering services, but also other contractual elements. Thus, IF you do not have a touristic license, you cannot offer services. So you can offer services if you have a house or semi, because you can get a license, but you cannot offer services in terraced houses or flats, because you cannot get licenses for these.

Presumming that you have a flat, cleaning should be done between tenants, but not during their stay. There are many other elements that are classed as services, so beware.

Now moving on onto ‘agencies’. House sitting companies, or property management companies, should indeed act with care, because they cannot be seen as providing services to the client. In addition, if you do not have a license, you must have a Tenancy Act contract between you, the landlord, and the tenant. So intermidiaries should be kept at a minimum. This contract is key, because it is what separates a touristic rental from a non-licensed, short term rental. In terms of advertisement, you should not advertise properties through touroperators, for instance. The classic websites, however, such as travelopo, owners direct etc are safe, as long as the advert that you put does not show services (and there are many items that contitute services), does not include forbidden keywords, etc

I don’t currently own a holiday home, but am seriously looking into it. However, in order to make it viable, I would be looking to rent it out on a short-term basis for a proportion of the year. I have read the regulations as per the in the article link above, and am concerned about the points below, which according to the regulations, both constitute Tourist Services:

“b) The provision and replacement of bedding, linens, home supplies in general.
c) Maintenance of the facility. ”

We could not reasonably expect short-term tenants to bring their own bedding etc with them, nor would we expect them to mow the lawn/fix a light bulb, so if we provide bedding etc, but only change it between tenants, would this still constitute a ‘tourist service’? Also, most apartment complexes, residential or otherwise, have a gardener/handyman on site, so would this constitute a ‘tourist service’ even though they are performing these duties as part of the community charge, which applies to all units?

Any pointers on the above would be greatly appreciated.

I feel that the current regulations are stifling potential investment in the property/tourism sector by responsible individuals. I am seriously considering looking elsewhere to make my investment, as these regulations seem overly punitive and restricting, favouring larger investors, and hoteliers.

The tourism board clearly made a mistake in the way they drafted the Balearics’ Tourism Act, and I suspect they know it, too. There will be no change in the law in the foreseeable future, since, in amongst other things, they know that rentals were always possible and are possible through the Spanish Tenancy Act, just not touristic ones. The regulations were aimed at TOURISTIC rentals, and this means rentals that offer services, not simply rentals aimed at tourists.

In regard to the points you mention, they are compulsory services that touristic lets (i.e., with licenses) must necessarily include, but one of them, namely, maintenance of the property, overlaps with a landlord and tenant obligation: indeed, it is a legal obligation of the landlord, according to the Spanish Tenancy Act, to maintain the property. Thus, what is deemed as a necessary service in a touristic, licensed let, is a simple obligation in a non-touristic, short term or long term let. The short-term tenants, therefore, are not expected to fix the washing machine, or keep up with the maintenance of the flat.

In regard to the bedding etc, again, there is no expectation that the bedding has to be brought in by the tenant: a flat is found with the linen and towels upon the commencement of the term, you just cannot be seen as replacing them.

Be warned, however: there are contractual obligations and requirements in non-touristic lets that extend beyond what I have just mentioned (a catalogue of these go beyond the scope of this answer and cannot be safely and simply summarised). The existence of a contract that keeps clear of touristic appearances and that incorporates certain not apparent terms and obligations is essential, as is correct advertisements and an appropriate choice of websites.

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Registration will allow you to participate in the forum, exchange private messages with other users, and save articles and properties in your favourites. Your information will not be used for any other purpose, and you can delete your profile at any time by emailing gdpr@spanishpropertyinsight.com. By submitting this form you agree to our Privacy Policy, Terms of Use, and Cookie Policy.